Tuesday, July 6, 2010

So Much For Encouraging Publishers To Mail Efficiently . . .

If the U.S. Postal Service wants publishers to mail more efficiently, you wouldn't know it from the exigent rate increases it requested today.

The average proposed rate increase both for Periodicals as a whole and for the large "Outside County" subcategory is 8.04%. But it's closer to 9% for many mailers who are engaged in co-mailing and other practices that reduce costs for both publishers and the Postal Service.

That's because the Postal Service wants to slap one of the highest increases, 9.0%, on the Basic Carrier Route rate -- the amount charged for each piece in a carrier-route bundle. But for somewhat less efficient bundles ("5-digit automation machinable"), the piece cost would only increase 5.8%.

For most publishers, those two rates represent the majority of their postage costs. More than 61% of the Postal Service's revenue from the "Outside County" subcategory comes from these two rates.

Except for those two rates, the vast majority of proposed Periodicals rate changes fall into the narrow range of 8.1% to 8.5%. The USPS wants to overhaul the rates in some other classes to align them more with costs, such as by charging catalogs more on a per-piece basis than on a per-pound basis.

But despite the Postal Service's complaints that some Periodicals rates are way out of line -- for example, that publishers pay only a fraction of the costs for bundles and sacks -- it is proposing almost no realignment of Periodicals rates.

The one exception is rate increases of about 21% for pallets that are not dropshipped, but that applies to less than one fourth of all Outside County pallets.

The Postal Service's plan goes to the Postal Regulatory Commission, which could do its own restructuring of Periodicals rates -- if it even decides that an exigent increase is legal and justified.


muckraker said...

Based on USPS projections last year, I had budgeted a 10 percent increase for my pub, so as expected.

Alan Robinson said...

It is clear that for flats, both periodicals and catalogs, the USPS will be soon developing a network with fewer drop points so sorting beyond five digit may not be encouraged as much

uncommonsense said...

In any area where the USPS is sequencing flats there is absolutely no increase in efficiency for the USPS between flats that arrive 5 digit and flats that arrive carrier routed. They will all be going on the same machine. In fact if it results in more bundles that need to be unpackaged before sorting a carrier route sort could be less efficient for the USPS than a 5 digit sort. As more areas have flats sequenced the cost difference between a 5 digit presentation and a carrier route presentation should decline to encourage effeciencies.